(RTTNews) - The Malaysian stock market has finished lower now in back-to-back sessions after alternating positive and negative closes over the last seven trading days. After hovering around 860 points, the Kuala Lumpur Composite Index dipped below 850 - and investors are bracing for even steeper falls in Tuesday’s trade.

The global forecast for the Asian markets is sharply negative as economic data confirmed that the United States is indeed in a recession and has been for a year - heightening fears that the recession will grow worldwide and last for several years. The U.S. markets responded to the news with heavy losses that also were a bit of correction following major gains last week. The Asian bourses are also expected to move significantly to the downside.

The KLCI finished sharply lower on Monday, thanks to heavy losses among the financial counters, while the industrial stocks also suffered significant losses, and the plantations also ended the session in the red.

For the day, the index fell 17.71 points or 2.0 percent to close at 848.43. Volume was 3.96 million shares worth 740.39 million ringgit. There were 345 decliners and 153 gainers, with 176 stocks finishing unchanged.

Among the decliners, Sime Darby fell 12.8 percent, while AirAsia dropped 12.2 and Malaysian Airlines System dropped 1.6 percent.

Wall Street offers a broadly negative lead as stocks moved sharply lower over the course of the trading day on Monday after turning in a strong performance last week. The major averages showed a steep drop at the open and continued lower throughout much of the session. The initial weakness came as investors took profits following the substantial gains seen last week, with the markets seeing further downside as investors reacted to some negative economic news as well as speeches from both Fed Chairman Bernanke and Treasury Secretary Paulson.

On the economic front, the Institute for Supply Management’s index of activity in the manufacturing sector fell to 36.2 in November from 38.9 in October, with a reading below 50 indicating a contraction in the sector. With the decrease, the index fell to its lowest level since May of 1982. Separately, the Commerce Department released its report on construction spending in the month of October, showing that spending fell by more than expected amid a notable decrease in spending on residential construction.

Speaking at an event hosted by the Greater Austin Chamber of Commerce in Austin, Texas, Federal Reserve Chairman Ben Bernanke said that further interest rate cuts from already low levels were “certainly feasible,” but he warned that the impact from any additional rate cuts would be “limited.” Bernanke said that the financial markets are better off for the moves authorities have taken lately, but he noted that absolute stability would take some time. He also predicted that the economy would likely remain weak for some time.

In his speech, Treasury Secretary Henry Paulson said that government actions taken to combat the financial crisis have made progress, though he noted that there is still much improvement that needs to be made. Paulson, who will be replaced as Treasury Secretary by New York Fed President Timothy Geithner when the next presidential administration takes over in January, also said that the government remains active in developing new programs.

The major averages saw some further downside going into the close of trading, ending the day at or near their worst levels of the day. The Dow closed down 679.95 points or 7.7 percent at 8,149.09, the Nasdaq closed down 137.50 points or 9.0 percent at 1,398.07 and the S&P 500 closed down 80.03 or 8.9 percent at 816.21.

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Posted in Categories: Releases, Stocks, USA.

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